The value of private equity deals in Europe has slumped by nearly a quarter during the first nine months of 2016 compared with last year, as the pace of deals in the U.K. and Ireland showed a marked decline in the wake of the EU referendum, according to numbers from data provider PitchBook.
The first three quarters of the year saw 249.4 billion euros ($275.9 billion) invested into 1,989 deals, heralding a respective 23 percent and 11 percent slide in both measures of activity, compared to the same period in 2015.
Numbers out of the U.K. and Ireland since the June 23 vote to leave the European Union show a 34 percent tumble in deal value and 14 percent pullback in the number of deals executed. Part of this is attributable to the near 12 percent drop the British pound suffered between the vote and the end of the third quarter, rendering lower the value of deals done when translated into euros for reporting purposes.
The so-called Brexit effect has had conflicting effects on deal-making appetite, with this initial data suggesting the political and economic uncertainty that accompanied the widely unexpected vote had weighed on enthusiasm for large-scale capital commitments from investors.
However, given the severely weakened sterling – which has continued to plummet during this quarter – the repricing of potential targets is likely to boost the appeal of British companies and assets going forward, say analysts at PitchBook – particularly for private equity firms which enjoy longer investment time frames that can be helpful in riding out short-term volatility.